How to earn $400K a year on top of your salary: Finance expert reveals the tricks he used to build his huge retirement income - and it's easier than you think
- Veteran investor Peter Thornhill, 72, from Melbourne, has an impressive portfolio
- Peter lives off $400,000 per annum in retirement through wise investing
- He spoke to Sydney financial expert Canna Campbell about getting started
- Peter said most importantly you need to spend less than you earn all the time
A veteran and established investor who has managed to build up his retirement income to a staggering $400,000 per year has shared his top investing tips so you can get started successfully.
Peter Thornhill, who is the best-selling author of Motivated Money and one of Australia's leading investors, has been working with money since 1982, before 'semi-retiring' so he now only does some public speaking and events.
'I deferred my lifestyle to this point in time, and I've got to say it's a hell of a lot more fun,' Peter said in conversation with the Sydney-based financial advisor Canna Campbell.
But how did he make the money that allowed for an affluent retirement?
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A veteran and established investor who has managed to build up his retirement income to a staggering $400,000 per year has shared his top investing tips so you can get started (PeterThornhill pictured with Canna Campbell)
Peter Thornhill (pictured), who is the best-selling author of Motivated Money and one of Australia's leading investors, has been working with money since 1982
Mr Thornhill, from Melbourne, said his investments began in the 1980s when he got a job in London at one of the big merchant banks as a private client adviser and was later promoted to director.
'What I learned there has irrevocably changed mine and my wife's lives for the better,' Peter, 72, said.
He explained that the first investment he made was shares in the company he worked for, before he went on to invest in a diversified portfolio of dividend-paying shares elsewhere and slowly built up his portfolio.
'The lesson was that it is all basically about creating an income stream and letting that income stream create all sorts of fabulous opportunities in life,' Peter said.
'It's a bit like taking an avocado, planting it and watching it grow.'
What are Peter's top tips for investors?
Peter (pictured with Canna) shared his top tips including spending less than you earn and borrowing less than you can afford
1. Spend less than you earn: This one is absolutely key and will set you up for financial success in the long run.
2. Borrow less than you can afford: This might sound simple, but almost no one does it.
3. Invest in a diversified basket of dividend-paying shares: Own a portfolio of productive businesses which deliver a passive income stream.
4. Use your dividends to buy more shares: The best thing to do with extra dividends is to use them to buy more shares.
5. Keep building your portfolio until your dividends exceed your spending: Use your monthly savings and your increasing dividends to continue growing the portfolio.
6. Retire and live off your portfolio: By this time, you should be able to retire and live off your portfolio.
He said the lessons he learned during the 'tough' early years - when he was trying to build a portfolio as well as raise his children - still applied today.
'Spend less than you earn and borrow less than you can afford,' he said.
While they sound obvious, Peter said 'so many' people find it impossible to do.
'If you can stick to those two things alone, then I can guarantee you will have a comfortable lifestyle down the track,' he said.
Peter's philosophy over the years has been to buy shares and build his holdings when he could afford to, until he reached the point where the dividends exceeded his spending and he could live off that passive income.
Canna (pictured) has long subscribed to Peter's ideas that you should spend less than you earn and borrow less than you can afford
'It sounds simple, but you need to live within your means,' he said.
'There have been times in my life when I could invest less, such as when the kids were going to school, and then times where I could work really hard on the investing side of things - when their school fees dropped away.'
Today, Peter said he has a retirement fund of more than $400,000 per annum.
Peter said you absolutely must have defined goals before you start, but you also need to keep an eye open for how you can do things better (pictured with Canna)
For those starting out in the market, he stressed the need for having defined goals, and also to learn from mistakes as it will improve your investment strategy.
'Regularly invest when you can as every little bit adds up,' he said.
'And remember to always spend less than you earn and borrow less than you can afford. It's all about focusing on the long-term financial goal for success.'
For more information about Peter Thornhill, you can visit his website here.
